The euro is “irreversible” and the beleaguered currency union is not in danger
of collapsing, according to European Central Bank President Mario Draghi.

The euro is “irreversible” and the beleaguered currency union is not in danger of collapsing, according to European Central Bank President Mario Draghi, who also argued that eurozone nations will eventually be bound even closer together.

The central bank chief suggested that analysts who have been tracking the mounting sovereign debt crisis in Europe have been too pessimistic in forecasting worst-case scenarios for the currency and had not recognised the political will behind the eurozone.

He was bullish on the future of the currency despite the escalating crisis in Spain, where stocks on Friday experienced their biggest one-day drop in two years, dragging other European markets down with them. The yields, or interest rates, on benchmark 10-year Spanish government bonds have also climbed even further beyond the 7pc threshold, which many market-watchers view as unsustainable.

Mr Draghi claimed that the currency was “absolutely not” in danger when asked by France’s Le Monde newspaper in an interview.

“We see analysts imagining the scenario of a euro zone blow-up,” he said. "They don't recognise the political capital that our leaders have invested in this union and Europeans' support. The euro is irreversible."

His comments come as the debt crisis continues to mount in Spain, where the regional administration of Valencia on Friday announced it needs financial help and is preparing to access an €18bn fund designed to aid struggling Spanish regions.

Mr Draghi argued that it was unavoidable that in the future states in the currency bloc will be drawn even closer together, politically and financially, leading to the formation of new European institutions.

"All movement towards financial, budgetary and political union is for me inevitable and will lead to the creation of new supranational bodies," Mr Draghi said.

The ECB has already begun to acquire new powers after it was agreed last month that the central bank should be put in charge of supervising banks. However, the ECB will need to keep those new powers separate to avoid a conflict of interest, and Mr Draghi suggested that it was possible that an “independent structure” may be formed.

He was also optimistic for the economic outlook of the region and said he did not think there was a risk that the entire currency bloc would slip into recession.